Am I Nuts, Let my home go to foreclosure!!

Ok this may sound crazy, but think of me as a curious child wanting to figure out how the stove works (not knowing it will hurt like hell).
I would consider myself as having pretty good credit (795). I’m interested in learning more about short sales. There is an investor in the neighborhood who claims to have completed nearly $6 million in short sale transactions. I have asked for his help by showing me the ropes. I offered to find the deal (I turn down 2-3 a week) and let him have ALL the profits as long as I can be there every step of the way. I get little to no response. Does this confuse anyone else? I’ve read about as many books as I can handle on this topic but I just don’t feel I have all the information I need.
I’m considering stopping payments on my own home and offering this guy a deal on my place. He can have the profits and my house as long as I can see what takes place. I realize this is pretty extreme but my real question here is…How bad with this affect my credit score? I don’t take great pride in my credit score but I may need a good one if I ever come across any opportunity where I need to use my own money. I can’t really call the bank and ask them, “If I stopped making my payments…” Does anyone have a good equation or logical estimation as to what damage this will cause to my credit score?

Thanks in advance!!

You’re nuts. Most folks on this forum had to, by necessity, learn how to get deals done without the unbearable crutches of cash or credit. To think you would sacrifice your credit to prove a point? That’s psycho…Use your credit wisely in this business…it gives you a tremendous edge. Having said that, I’ll take your home and your profits :wink: in exchange for an education…lol

That is the dumbest thing I have ever heard.
Do what ever you can to keep that excellent credit score.

It could be that the guy does not want to help you out is because of garbage like that spewing out of your mouth.

If someone said that to me. I would not want to have anything to do with them. That just shows a total lack of common sense.



To say that you don’t take pride in a credit score of 795 and that you are willing to let your own home begin foreclosure to find out is as others have already stated… nuts.

A foreclosure will destroy your credit and if you can’t grasp that idea and the notion of how important your credit is in this business you are headed for a long hard road.

I by no means am an expert and actually far from it but most people would kill for a credit score that high. Aside from expertise just using common sense that is a horrible idea.

You also said about calling the bank and saying “If I stopped making my payments…” Why can’t you do that? You could do exactly that. I would imagine that you could speak to someone at the bank that could explain the process and what would happen if you were to do so.

Why not just go out in the backyard, throw a rope over a nice tree limb, and hang yourself? Your credit will be ruined and your score will probably drop to the low 500’s costing you thousands on anything you try to finance. This is NOT the way to learn how to do a short sale. Try READING!

Are you aware that with your current credit score there are plenty of people who will pay you big bucks to co-sign a note with them – or to joint venture??

Remember: Drugs lead nowhere, but they take the Scenic Route.

Dave, Bruce, seanmathes, mtnwizard -

I appreaciate the feedback. It’s what I expected to hear.
A couple of questions…

  1. How do you calculate what my score will end up being?
  2. What books? I can’t find anything out there that has more than 2 pages of vage information about working a short sale.

Great idea for someone who knows the system…write a book about the short sale process and make millions!!

Thanks again!

A short sale is when a lender accepts a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy. Instead of buying from a seller, you are purchasing the property directly from the lender for a discount. For example: A homeowner, who is facing foreclosure, has an existing first mortgage of $300,000. You write an offer to the lender for $220,000, which is accepted as full payment for the loan. This is a short sale.

Why are they willing to take such a discount? Several reasons. First of all, banks do not like excess inventory and bad loans on their books; therefore, if they see an opportunity where they can sell the property without a huge loss, they will do it. Secondly, lenders know they could lose a lot more money if the property goes to auction. There are so many fees involved if the property goes to auction, that they would be better off taking the discount beforehand and be finished with the headache of it all.

Foreclosures are at an all time high, which translates into more opportunities for you. Since foreclosures are increasing, this is the perfect time to jump into this because there will be more and more lenders discounting properties. It is safe to say that most lenders will accept a short sale, however, you may come across one or two lenders who will not discount. If the numbers work out for the lender they will do it.

It is best to do a short sale when the property is in the pre-foreclosure state. Yes, you can perform a short sale when the bank owns the property, however your profits will more than likely be smaller. There are two stages within pre-foreclosure. The first stage being those individuals who are behind on payments and the second stage are those who are behind on payments with a notice of default. In order for this to work properly and for you to successfully get a short sale, you must find the homeowners who are in the second stage of pre-foreclosure or more than 3 payments behind on their mortgage. Once the notice of default has been recorded, banks become motivated as well, so you are more likely to get a discount. Until that time, very rarely will a bank ever discount a mortgage that soon. Why would they? The homeowners still have time to cure the loan and make up the back payments.

It does not matter what type of house or condition it’s in, all mortgages can be discounted. The best properties to perform a short sale on are the houses that need lots of work and repairs because lenders will give you a bigger discount if they see they are “don’t wanters”.

Properties that are over leveraged are also prime candidates. Most rookie investors who see a house over leveraged with an upside-down mortgage may think there is no hope for this property. On the other hand, this is a sweet deal to the savvy investor. Properties with large 2nd mortgages are also treated as gold because the 2nd mortgage is wiped out at the foreclosure auction. Lenders with a 2nd and 3rd mortgage position would rather have something than nothing.

Good luck.

Join a local REI club.

I’ve been to 2 meetings where the speakers where selling their courses on shortsales and training.

Your also not looking very hard…

but then again, with the options you came up with, your journey would be much more of a lesson. Painful and exhausting…and you still won’t have the answers your looking for.

I won’t even dignify this idea with a response… ::slight_smile:

Goldthread…up until recently, I had a FICO score in the low 500’s for quite some time…mainly due to being unable to work for long periods of time. My scores are now in the mid 700’s. I will not comment on everything you talked about, because of my lack of knowledge. but I can tell you one thing…you definitely do not want a 500 score if you can help it. Good luck.

if this guy won’t take a deal u r passing to him, ever think he is full of poppycock? probably just likes to talk. if i had birdogs (that what u r if u are finding deals and bringing them to an investor) bringing me offers, i’d surely look into them. doesn’t even sound like he is wanting to do that.

Dmiller -

I do visit with an REI club every month…that’s where I met this guy. Our club isn’t real big, 10-15 guests every month but it’s still educational. Everyone seems very guarded. Which I don’t understand because nobody uses the same techniques to invest in their properties.

Have you used this course you mention? When offered a course I tend to shy away…I’m more of a library guy…maybe I pay a $1 late fee but that’s all I’m out. I’m thinking I would only get a broad overview and little detail…like the other foreclosure books I’ve read.

Rich Dad says “You will succeed by failing faster”
However what you are talking about is not failing.
What you are talking about is commiting suicide by helping someone pull the trigger.

Listen to the advice people have gave you here / There are many courses on short-sales.

Also learn the difference between a sales pitch and financial advice, this guy you are talking to if full of S*** I had the same scenerio offered to me. This is the type of advice that gets bad media rep and what the article was talking about on another thread!

You wanna learn to do short sales? The fastest way to learn how to do them is…just start doing them…it’s just not all that complicated…it’s amazing how fast you learn to swim when you’re in water over your head.

I am pretty sure at this point that you do not understand what your credit score can do for you. Well let me say this. Only 20% of the United States is above a 700 Fico Score and everything you pay for on credit for the next 10 years is based on your previous ability to repay your debts.
Including car insurance, new homes, cars, etc…
Thinking about tossing your credit out the window to try a short sale and “hope it works” tells me you might really have something else going on in your world.
Take a step back and re read all of the responses on this post and than ask yourself if you think this is really a good idea.
I live by this quote:

“It is not a deficiency in knowing, it is a deficiency in execution”.
Hang in there and get out there and learn.

You don’t want to be out more that a dollar at the library in order to learn, but you are willing to lose your house just to learn?

Get a good course,